Isssue Date Septem mber 30, 20088 A Audit Report Num mber 2008-PH-1014 TO: Jamess D. Cassidyy, Director, Office O of Pubblic Housingg, Pittsburgh Field Officee, 3EP PH FROM: John P. P Buck, Reggional Inspector Generall for Audit, Philadelphia P a Regional Officce, 3AGA SUBJEC CT: The Housing H Authhority of thee City of Pittsburgh, Pennnsylvania, Did D Not Adeequately Adm minister Its Housing H Asssistance Paym ments for Leeased Housinng HIGH HLIGHT TS What We W Audited d and Why We au udited the Hoousing Authhority of the City of Pittssburgh’s (Auuthority) adminnistration of its housing assistance a paayments for leased housing under itss Movin ng to Work Demonstrati D ion program agreement based b on ourr analysis off variouus risk factorrs relating too housing auuthorities adm ministering a leased houssing prograam within ouur region. This T is the firrst of two auudit reports we w plan to isssue on thee Authority’ss program. The T audit obbjective addrressed in thiss report was to determ mine whetheer the Authorrity properlyy maintainedd documentattion to suppoort housinng assistancee payments and a accurateely calculated them. What We W Found The Authority A didd not properlly maintain documentati d on to supporrt housing assistaance paymennts and did not n always acccurately caalculate houssing assistancce paymeents for its leeased housinng. We idenntified deficiencies in 28 of the 30 tenant files th hat we revieewed. The Authority A didd not maintaiin complete documents requirred by the U.S. Departm ment of Housiing and Urbaan Developm ment (HUD)) and its ow wn administraative plan, reesulting in unsupported u h housing assiistance paym ments of $58,470. It also made ineligible housing assistance payments totaling $12,180 because it did not execute housing assistance payments contracts within 60 days of the beginning of the lease term, and it made housing assistance payments before the effective date of the related housing assistance payment contract. Lastly, the Authority inaccurately calculated housing assistance payments, resulting in $4,811 in overpayments and $1,708 in underpayments. What We Recommend We recommend that HUD require the Authority to correct the errors in the tenant files identified by the audit, provide documentation to support housing assistance payments totaling $58,470 or reimburse its leased housing program for the payments that it cannot support, reimburse its leased housing program $16,991 for the ineligible payments and overpayments, and reimburse applicable tenants $1,708 for the housing assistance underpayments. For each recommendation without a management decision, please respond and provide status reports in accordance with HUD Handbook 2000.06, REV-3. Please furnish us copies of any correspondence or directives issued because of the audit. Auditee’s Response We provided our discussion draft audit report to the Authority on July 30, 2008. We discussed the report with the Authority during the audit and at an exit conference on August 7, 2008. Following the exit conference, we provided an updated draft to the Authority on August 14, 2008. The Authority provided written comments to our draft report on August 22, 2008. The Authority disagreed with some of the conclusions in the report and reimbursement of any ineligible costs, but it stated that it has developed and is implementing policies and procedures to address the deficiencies that we identified. The complete text of the Authority’s response, along with our evaluation of that response, can be found in appendix B of this report. 2 TABLE OF CONTENTS Background and Objectives 4 Results of Audit Finding: The Authority Did Not Adequately Administer Its Leased Housing 5 Assistance Payments in Accordance with HUD Requirements Scope and Methodology 9 Internal Controls 11 Appendixes A. Schedule of Questioned Costs and Funds to Be Put to Better Use 13 B. Auditee Comments and OIG’s Evaluation 14 C. Criteria 30 D. Results of Tenant File Reviews 34 E. Housing Assistance Payment Errors 35 3 BACKGROUND AND OBJECTIVES The Housing Authority of the City of Pittsburgh (Authority) was established as a public corporation in 1937 under the Housing Authority Law of the Commonwealth of Pennsylvania to provide decent, safe, and sanitary housing in the most efficient and economical manner. A seven-member board of commissioners governs the Authority. The mayor of the City of Pittsburgh appoints the members of the board. The board appoints an executive director to administer the affairs of the Authority. The current executive director is A. Fulton Meachem, Jr. The Authority’s main administrative office is located at 200 Ross Street, Pittsburgh, Pennsylvania. In 1996, Congress authorized Moving to Work as a U.S. Department of Housing and Urban Development (HUD) demonstration program. Congress exempted the participants from many of the Housing Act of 1937 and associated regulations as outlined in the individual Moving to Work agreements that HUD established with the program’s participants. In October 1998, the language in the Departments of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act of 1999 (Public Law 105-276, 112 Stat. 2461) specifically named and authorized the Authority to join the demonstration program. In November 2000, HUD signed a five-year Moving to Work agreement with the Authority. In April 2005, HUD agreed to extend the term of the Authority’s Moving to Work agreement for one year. In December 2006, HUD agreed to extend for three years the term of the Authority’s Moving to Work agreement. The expiration date of the Authority’s current agreement is December 31, 2009. Under the Section 8 Housing Choice Voucher program, the Authority was authorized to provide leased housing assistance payments to more than 7,000 eligible families. HUD authorized the Authority the following financial assistance for housing choice vouchers: Authority fiscal year Annual budget authority 2005 $34,714,733 2006 $35,828,080 2007 $34,991,503 Totals $105,534,316 Our audit objective was to determine whether the Authority properly maintained documentation to support housing assistance payments and accurately calculated them. 4 RESULTS OF AUDIT Finding: The Authority Did Not Adequately Administer Its Leased Housing Assistance Payments in Accordance with HUD Requirements The Authority did not properly maintain documentation to support housing assistance payments and did not always accurately calculate housing assistance payments for its leased housing in compliance with HUD requirements. This condition occurred because the Authority did not implement quality control procedures to ensure that it followed HUD requirements. As a result, it was unable to support $58,470 in housing assistance payments and improperly overpaid $16,991 and underpaid $1,708 in housing assistance. The Authority Lacked Proper Documentation in Its Tenant Files and $58,470 of Payments Were Unsupported The Authority lacked proper documentation to support housing assistance payments totaling $58,470 for the period September 2005 through December 2007. Our review of 30 tenant files showed that 28 files had at least one of the following key documents missing or incomplete: • 27 files did not have fully executed housing assistance payments contracts (signed but not dated by the Authority, the owner, or both), • 18 files did not have a signed and/or dated lease, • 10 files did not have leases executed before the beginning of the lease term, • Six files did not have a completed request for tenancy approval, • Five files did not have evidence of an adequate rent reasonableness review, • Five files either did not have an Authorization for Release of Information/Privacy Act Notice (HUD Form 9886) or the form was incomplete, • Three files did not have proper income verification, • Three files either did not have a lead-based paint certification or the certification was not signed by the tenant, • One file did not have an interim reexamination completed as required, and • One file did not have a completed criminal background check. The files reviewed did not include complete documentation required by HUD and were not consistent with the Authority’s administrative plan. Although the 5 majority of the deficiencies are in essence documentation issues, there were instances in which incomplete documentation or the lack of documentation was material and resulted in the Authority making unsupported housing assistance payments of $58,470. We conservatively determined that the Authority made unsupported payments of • $41,258 in 6 of the 27 files in which the housing assistance payment contract was not signed, • $13,954 in the three files that lacked third party verification of income, and • $3,258 in three of the five files that had inadequate rent reasonableness reviews. Appendix D of this report shows the detailed results of our tenant file reviews. The Authority Made Ineligible Housing Assistance Payments The Authority also made ineligible housing assistance payments totaling $12,180 in 4 of the 30 tenant files reviewed. It made $10,971 in ineligible payments because it did not execute the housing assistance payments contract within the required period of 60 days from the beginning of the lease term. HUD regulations require the contracts to be executed no later than 60 calendar days from the beginning of the lease term. Any contract executed after the 60 day period is void and the Authority may not pay any housing assistance payment to the owner. This condition occurred in four files that we reviewed. The Authority made another $1,209 in ineligible payments because it made the payments before the effective date of the housing assistance payments contract. HUD regulations prohibit the Authority from making any assistance payment to the owner until the housing assistance payment contract has been executed. This condition occurred in one file1 that we reviewed. Appendix D of this report shows the detailed results of our tenant file reviews. The Authority Incorrectly Calculated Housing Assistance Payments The Authority incorrectly calculated housing assistance payments, resulting in overpayments of $4,811 and underpayments of $1,708 for a total difference of $6,519 for the period September 2005 through December 2007. To determine 1 One file (tenant 26) had total ineligible costs of $2,015 related to deficiencies with housing assistance payment contracts ($806) and early payments ($1,209). 6 whether the Authority correctly calculated the housing assistance payments, we reviewed 59 annual reexaminations from 30 tenant files. The Authority incorrectly calculated housing assistance payments in 10 of the 30 tenant files reviewed. The Authority made these errors because it did not • Retroactively adjust housing assistance payments based on an increase in tenant income (one file, $3,339 overpayment), • Include child support payments in the income calculations and did not properly calculate other income and wages (one file, $1,140 overpayment), • Properly include unemployment compensation and a related dependent allowance in the income calculations (one file, $140 overpayment), • Properly calculate medical assistance (one file, $120 overpayment), • Properly calculate a medical deduction (one file, $72 overpayment), and • Properly calculate medical expense deductions and tenant income (five files, $1,708 underpayments). Appendix E of this report shows the housing assistance payment errors that resulted from the Authority’s incorrect calculations. The Authority Needs to Establish Quality Control and Compliance Procedures Although the problems discussed in this finding occurred mainly because of administrative errors made by the Authority’s staff, the Authority’s lack of quality control and compliance procedures contributed significantly to this situation. The Authority did not perform supervisory quality control reviews to ensure that all required documentation was properly maintained in its tenant files and did not implement procedures and controls to ensure that it followed HUD requirements. The Authority’s administrative plan stated that it was required to perform quality control reviews for units under contract. However, the Authority acknowledged that it had not performed quality control reviews before September 2007. It stated that since September 2007, it had established a quality control and compliance program and that it views this component of its operations as a continual process that will be updated and enhanced as needs are identified. The Authority indicated that it had made changes and implemented some controls and that it planned to make additional changes and implement additional controls to improve its leased housing program. Conclusion The Authority did not adequately administer its leased housing assistance payments. As a result, it disbursed $58,470 in housing assistance payments without proper documentation and overpaid $16,991 and underpaid $1,708 in 7 housing assistance. The Authority needs to implement adequate controls and procedures to improve its administration of the program and ensure that it complies with HUD requirements and its administrative plan. Recommendations We recommend that the Director of HUD’s Office of Public Housing, Pittsburgh field office, direct the Authority to 1A. Correct the errors in the tenant files identified by the audit. 1B. Provide documentation to support housing assistance payments totaling $58,470 or reimburse its leased housing program from nonfederal funds for the payments that it cannot support. 1C. Reimburse its leased housing program $16,991 from nonfederal funds for the ineligible housing assistance payments identified by the audit. 1D. Reimburse applicable tenants $1,708 from program funds for the housing assistance underpayments. 1E. Improve its controls by implementing procedures to help reduce and/or prevent recurring deficiencies in its payments calculation process, ensure that housing assistance contracts and leases are executed as required, and that assistance payments are made after contracts have been properly executed. 1F. Develop and implement policies and procedures for performing quality control reviews of files and documenting the results of those reviews and any actions taken. 1G. Develop procedures for employees to adequately maintain all supporting documentation in tenant files. 8 SCOPE AND METHODOLOGY To accomplish our objective, we • Reviewed applicable laws; regulations; the Authority’s administrative plan; HUD’s program requirements at 24 CFR [Code of Federal Regulations] Parts 5, 35, and 982; HUD’s Public and Indian Housing Notices 2004-01 and 2004-18; and HUD’s Housing Choice Voucher Program Guidebook 7420.10G; • Reviewed the Authority’s accounting records; annual audited financial statements for 2003, 2004, and 2005; check register; tenant files; computerized databases including housing assistance payment register and HUD-50058 (Family Report) data; board meeting minutes; organizational chart; correspondence; and Moving to Work documents including the agreement, plans, and reports; and • Reviewed HUD’s monitoring reports for the Authority. We also interviewed the Authority’s employees and HUD staff. To achieve our audit objective, we relied in part on computer-processed data in the Authority’s database. Although we did not perform a detailed assessment of the reliability of the data, we did perform a minimal level of testing and found the data to be adequate for our purposes. We randomly selected files for 20 tenants receiving housing assistance payments during our audit period from the Authority’s housing assistance payment register. The universe included 6,416 families that were receiving housing assistance payments. Additionally, we selected files for 10 of 21 new tenants the Authority admitted to the program during the month of August 2007. Therefore, we reviewed 30 tenant files in total. As stated in the audit report, we identified deficiencies in 28 tenant files that we reviewed and determined that the Authority made ineligible housing assistance payments totaling $16,991 during the period from September 2005 to December 2007. We analyzed an automated data file that the Authority provided containing family information for all persons participating in its leased housing program as of August 2007. The Authority had 6,416 families in its data file. We screened the Social Security numbers for the heads of household for the 6,416 families against a database provided to us by the Social Security Administration to determine whether heads of household were deceased. We determined that 106 Social Security numbers for heads of household were associated with a deceased person and 14 had validation issues. We reviewed the tenant files for 10 of the 106, and 2 of the 14. We identified only minor internal control issues relating to the Authority’s handling of these situations, and we reported them to the Authority in a separate letter. We performed our on-site audit work between September 2007 and June 2008 at the Authority’s office located at 200 Ross Street, Pittsburgh, Pennsylvania. The audit covered the period September 1, 2005, through August 31, 2007, but was expanded when necessary to include other periods. 9 We performed our audit in accordance with generally accepted government auditing standards. 10 INTERNAL CONTROLS Internal control is an integral component of an organization’s management that provides reasonable assurance that the following objectives are being achieved: • Effectiveness and efficiency of operations, • Reliability of financial reporting, and • Compliance with applicable laws and regulations. Internal controls relate to management’s plans, methods, and procedures used to meet its mission, goals, and objectives. Internal controls include the processes and procedures for planning, organizing, directing, and controlling program operations. They include the systems for measuring, reporting, and monitoring program performance. Relevant Internal Controls We determined the following internal controls were relevant to our objectives: • Program operations – Policies and procedures that management has implemented to reasonably ensure that a program meets its objectives. • Validity and reliability of data – Policies and procedures that management has implemented to reasonably ensure that valid and reliable data are obtained, maintained, and fairly disclosed in reports. • Compliance with laws and regulations – Policies and procedures that management has implemented to reasonably ensure that resource use is consistent with laws and regulations. • Safeguarding resources – Policies and procedures that management has implemented to reasonably ensure that resources are safeguarded against waste, loss, and misuse. We assessed the relevant controls identified above. A significant weakness exists if internal controls do not provide reasonable assurance that the process for planning, organizing, directing, and controlling program operations will meet the organization’s objectives. 11 Significant Weakness Based on our audit, we believe the following item is a significant weakness: • The Authority did not establish and implement adequate controls to ensure that assistance payments were properly supported and the accuracy of housing assistance payments. 12 APPENDIXES Appendix A SCHEDULE OF QUESTIONED COSTS AND FUNDS TO BE PUT TO BETTER USE Recommendation Funds to be put number Ineligible 1/ Unsupported 2/ to better use 3/ 1B $58,470 1C $16,991 1D $1,708 1/ Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity that the auditor believes are not allowable by law; contract; or federal, state, or local policies or regulations. 2/ Unsupported costs are those costs charged to a HUD-financed or HUD-insured program or activity when we cannot determine eligibility at the time of the audit. Unsupported costs require a decision by HUD program officials. This decision, in addition to obtaining supporting documentation, might involve a legal interpretation or clarification of departmental policies and procedures. 3/ Recommendations that funds be put to better use are estimates of amounts that could be used more efficiently if an Office of Inspector General (OIG) recommendation is implemented. This includes reductions in outlays, deobligation of funds, withdrawal of interest subsidy costs not incurred by implementing recommended improvements, avoidance of unnecessary expenditures noted in preaward reviews, and any other savings which are specifically identified. The funds to be put to better use in this report represent funds that tenants overpaid due to the Authority’s calculation errors. 13 Appendix B AUDITEE COMMENTS AND OIG’S EVALUATION Ref to OIG Evaluation Auditee Comments 14 Comment 1 Comment 2 Comment 3 Comment 4 Comment 5 15 Comment 4 Comment 6 Comment 6 Comment 7 16 Comment 7 Comment 7 Comment 8 17 Comment 8 Comment 9 Comment 9 18 Comment 10 Comment 10 Comment 11 Comment 12 19 Comment 13 Comment 13 Comment 14 20 Comment 14 Comment 15 Comment 15 Comment 16 21 Comment 16 Comment 17 Comment 18 Comment 16 22 23 24 OIG Evaluation of Auditee Comments Comment 1 The conclusions in the audit report are supported by audit work performed in accordance with generally accepted government auditing standards and support the finding. Comment 2 The Authority’s response included a report from a consultant hired by the Authority to review our audit findings. The consultant’s report was dated June 11, 2008, but was not furnished to us until two months later, when the Authority provided its formal response to our draft report. The consultant’s report was based on preliminary findings that we communicated to the Authority as the audit progressed. We did not include the consultant’s report because the report contained language restricting its use. The Authority’s response incorporated the consultant’s analysis and we, in turn, considered the consultant’s analysis in our comments to the Authority’s written response. (See Comments 4, 6, 13, 14 and 15) We also revised the report and appendix D to show that the majority of the deficiencies were documentation issues and we conservatively included in our calculations of questioned costs only those instances where incomplete documentation or the lack of documentation was material. Comment 3 We revised the report to show that the majority of the deficiencies were documentation issues and we conservatively included in our calculations of questioned costs only those instances where incomplete documentation or the lack of documentation was material. Comment 4 HUD regulations at 24 CFR [Code of Federal Regulations] 982.305 (c) state that the Public Housing Authority must use its best efforts to execute the Housing Assistance Payment (HAP) contract before the beginning of the lease term. The contract must be executed no later than 60 calendar days from the beginning of the lease term. Any HAP contract executed after the 60 day period is void, and the Public Housing Authority may not pay any housing assistance payment to the owner. As stated in the report, in 27 files, the HAP contract was not dated by the Authority, the owner, or both parties. Because dates were missing, we could not determine whether the HAP contract was executed within 60 days of the beginning of the lease term or not. We considered other documentation in the tenant files as well as the Authority’s housing assistance payment register and conservatively determined that payments totaling $41,258 were unsupported for six tenants. In the six cases, the Authority made payments to the owners for three and a half to six times the normal monthly assistance payment amount. This gives indication that the contracts were not executed until more than 60 days after the beginning of the initial term of the lease. Further, in two of the six cases, date stamps on the back of the HAP contracts, documenting receipt by the Authority, gave additional indication that the contracts were executed closer to the date of the first payment to the owner (20 days and 17 days), rather than the effective date of the lease term (134 days and 76 days). 25 We are encouraged by the Authority’s statement that it is developing and implementing quality control procedures to ensure that all HAP contracts are dated when signed. Comment 5 Based on additional analysis that we performed as a result of the exit conference, we revised the appendix in the report to show that 27 of the files we reviewed did not have a fully executed housing assistance payments contract. Comment 6 HUD regulations at 24 CFR 982.305 (b) state that the landlord and the tenant must always execute the lease before the beginning of the initial term of the lease for a unit. Because dates were missing, we could not determine whether the leases were executed before the beginning of the lease or not. Regarding tenant 17, contrary to HUD regulations, the lease was not executed before the beginning of the initial term of the lease. The beginning of the initial term of the lease was July 16, 2004, and the owner and the tenant signed and dated the lease on July 30, 2004. Therefore, we revised our results to show that the lease was not signed before the term of the lease rather than not being present, signed and dated. Regarding tenant 2, contrary to HUD regulations, the lease was not executed before the beginning of the initial term of the lease. The beginning of the initial term of the lease was December 1, 2004, and the owner and the tenant signed and dated the lease on February 21, 2005. Therefore, we revised our results and removed the mark indicating that the lease was not present, signed and dated. We revised the report to show that this deficiency was a documentation issue. We are encouraged by the Authority’s statement that it is developing and implementing quality assurance procedures to ensure that all leases are dated when signed. Comment 7 As stated in the audit report, our review of tenant files showed that key documents were missing or incomplete. For tenants 23, 26, and 30, the rent comparability forms were incomplete and the Authority did not provide any other documentation to demonstrate that a rent comparison was conducted and that the rent was reasonable for these units. Regarding tenant 7, rent reasonableness certifications were in the file for the 2002, 2003 and 2004 rent increases. Although the comparability forms supporting the 2002 and 2003 certifications were not current, the comparables for the 2004 certification were current. Since the most recent certification was acceptable, we removed the results for this tenant from the report. We revised our results for tenant 19 because a rent reasonableness review was not needed because there was no increase in rent. The report now shows that five files lacked evidence of an adequate rent reasonableness review. Comment 8 The Authorization for Release of Information/Privacy Act Notice is a HUD form (HUD Form 9886) and it includes space to identify the name of the Public Housing Authority requesting the release of information, including the full address, name of contact person, and date. As such, the Authority is required to accurately and completely fill out the form. The Authority claims that the tenant 26 and the recipient of the form are made aware of the requestor through a cover letter or otherwise, however, we found no evidence in the tenant files reviewed to support the Authority’s claim. Further, a cover letter could easily become separated from the form and as a result, the recipient would not have any information regarding the party requesting the information. We revised the report to show these deficiencies as documentation issues. We are encouraged by the Authority’s statement that it is developing and implementing additional quality assurance procedures to ensure that it will completely fill out Authorization for Release of Information/Privacy Act Notices. Comment 9 The Request for Tenancy Approval is a HUD form (form HUD-52517). HUD’s Housing Choice Voucher Program Guidebook, 7420.10G, section 8.7, states that Public Housing Authorities must use the form for requesting tenancy approval. Further, the Authority’s administrative plan requires that the Request for Tenancy Approval be signed by both the tenant and the owner. Our results showed that three forms lacked a date and three forms lacked a required signature. We revised the report to show these deficiencies as documentation issues. We are encouraged by the Authority’s statement that it is developing and implementing additional quality assurance procedures to ensure that Requests for Tenancy Approval are dated when signed. Comment 10 HUD regulations at 24 CFR 35.92 addressing lead-based paint require a statement by the lessor disclosing the presence of known lead-based paint and /or lead-based paint hazards in the housing being leased or indicating no knowledge of the presence of lead-based paint and/or lead-based paint hazards. The lessor shall also disclose any additional information available concerning the known lead- based paint and/or lead-based paint hazards, such as the basis for the determination that lead-based paint and/or lead-based paint hazards exist in the housing, the location of the lead-based paint and or lead-based paint hazards, and the condition of the painted surfaces. The regulation also requires the signatures of the lessors, agents, and lessees certifying to the accuracy of their statements to the best of their knowledge, along with the dates of signature. The certification is intended to protect the assisted families from the hazards associated with lead- based paint. We are encouraged by the Authority’s statement that it is developing and implementing additional procedures to ensure that all tenant files contain lead- based paint certifications signed and dated by the tenant, but we point out that the Authority needs to ensure that all involved parties sign and date the certifications as required. Comment 11 HUD regulations at 24 CFR 982.158 state that the Public Housing Authority must maintain complete and accurate accounts and records for the program in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The records must be in the form required by HUD, and include 27 copies of executed leases and HAP contracts, lead-based paint records as required by part 35, subpart B of this title, records to document the basis for determining rent reasonableness and other records specified by HUD. The Authority did not properly maintain documentation to support housing assistance payments in accordance with HUD regulations and its own administrative plan. For example, as noted in comment 8 above, the Authority’s administrative plan required the Request for Tenancy Approval to be signed by both the tenant and owner (see Comment 12). Further, the administrative plan reiterates HUD regulations and requires the Authority to execute HAP contracts no later than 60 calendar days from the beginning of the lease term. Since HAP contracts were frequently not dated, the Authority could not demonstrate its compliance with this requirement (see Comment 4). As stated in the report, the Authority needs to improve its administration of the program. Comment 12 Ineligible costs are expenditures of HUD funds that are not allowable by law; contract; or federal, state or local policies or regulations. As explained in our comments that follow, the Authority did not comply with HUD regulations and as a result it made ineligible expenditures despite the fact that the tenants met eligibility requirements. Comment 13 Contrary to the Authority’s assertion, for tenant 12, although the lease was signed but not dated by the owner, it was signed and dated by the tenant 47 days after the beginning of the lease term. For tenant 20, the owner and the tenant signed and dated the lease 65 days after the beginning of the lease term. The final report correctly shows 10 files had this deficiency. We revised the report to show these deficiencies as documentation issues. We are encouraged by the Authority’s statement that it is developing and implementing additional quality assurance procedures to ensure that all leases are signed prior to the beginning of the lease term. Comment 14 The draft report indicated that in five files, not six, as stated by the Authority, it did not execute the HAP contract within 60 days from the beginning of the lease term. For tenant 20, although the HAP contract was signed but not dated by the Authority, it was signed and dated by the owner 65 days after the beginning of the term of the lease term. To be conservative, we revised the results for tenant 14 to show that $9,404 are unsupported costs because the date stamp on the back of the HAP contract is an indicator and not definitive to demonstrate when the contract was executed. We are encouraged by the Authority’s statement that it is developing and implementing additional quality assurance procedures to ensure that all HAP contracts are executed within the required time period. Comment 15 HUD regulations at 24 CFR 982.305 (c) state that the Public Housing Authority may not pay any housing assistance payment to the owner until the HAP contract has been executed. However, to be conservative, we revised the report and 28 removed the results for those tenants for which the payment was processed over a weekend. We are encouraged by the Authority’s statement that it is developing and implementing additional quality assurance procedures to ensure that HAP payments are not made before the effective date of the HAP contract. Comment 16 We revised the report to show that the amount for tenant 8 is $3,339. We are encouraged by the Authority’s statement that it is developing and implementing additional quality assurance procedures to ensure that HAP and utility allowance calculation errors are minimized. Comment 17 The Authority did not provide an explanation or documentation to support its disagreement with our determination that the tenants were underpaid. However, we revised the results for tenant 13 from $270 to $450 in the final report because the underpayments occurred for at least 10 months rather than the six months reported in the draft report. Comment 18 The correct total of underpayments identified by the audit is $1,708 as revised (see Comment 17). 29 Appendix C CRITERIA 24 CFR [Code of Federal Regulations] 5.901 (a) General criminal records searches. This subpart applies to criminal conviction background checks by public housing authorities that administer the Section 8 and public housing programs when they obtain criminal conviction records, under the authority of section 6(q) of the 1937 Act (42 U.S.C. [United States Code] 1437d(q)), from a law enforcement agency to prevent admission of criminals to public housing and Section 8 housing and to assist in lease enforcement and eviction. 24 CFR [Code of Federal Regulations] 35.92 (b)(1) A Lead Warning Statement with the following language: Housing built before 1978 may contain lead-based paint. Lead from paint, paint chips, and dust can pose health hazards if not managed properly. Lead exposure is especially harmful to young children and pregnant women. Before renting pre-1978 housing, lessors must disclose the presence of lead-based paint and/or lead-based paint hazards in the dwelling. (2) A statement by the lessor disclosing the presence of known lead-based paint and/or lead- based paint hazards in the target housing being leased or indicating no knowledge of the presence of lead-based paint and/or lead-based paint hazards. The lessor shall also disclose any additional information available concerning the known lead-based paint and/or lead-based paint hazards, such as the basis for the determination that lead-based paint and/or lead-based paint hazards exist in the housing, the location of the lead-based paint and/or lead-based paint hazards, and the condition of the painted surfaces. (3) A list of any records or reports available to the lessor pertaining to lead-based paint and/or lead-based paint hazards in the housing that have been provided to the lessee. If no such records or reports are available, the lessor shall so indicate. (4) A statement by the lessee affirming receipt of the information set out in paragraphs (b)(2) and (b)(3) of this section and the lead hazard information pamphlet required under 15 U.S.C. 2696. (5) When any agent is involved in the transaction to lease target housing on behalf of the lessor, a statement that: (i) The agent has informed the lessor of the lessor’s obligations under 42 U.S.C. 4852d; and (ii) The agent is aware of his/her duty to ensure compliance with the requirements of this subpart. (6) The signatures of the lessors, agents, and lessees certifying to the accuracy of their statements to the best of their knowledge, along with the dates of signature. (c) Retention of certification and acknowledgment information. (1) The seller, and any agent, shall retain a copy of the completed attachment required under paragraph (a) of this section for no less than 3 years from the completion date of the sale. The lessor, and any agent, shall retain a copy of the completed attachment or lease contract containing the information required under paragraph (b) of this section for no less than 3 years from the commencement of the leasing period. 30 (2) This recordkeeping requirement is not intended to place any limitations on civil suits under the Act, or to otherwise affect a lessee’s or purchaser’s rights under the civil penalty provisions of 42 U.S.C. 4852d(b)(3). (d) The seller, lessor, or agent shall not be responsible for the failure of a purchaser’s or lessee’s legal representative (where such representative receives all compensation from the purchaser or lessee) to transmit disclosure materials to the purchaser or lessee, provided that all required parties have completed and signed the necessary certification and acknowledgment language required under paragraphs (a) and (b) of this section. 24 CFR [Code of Federal Regulations] 982.158, Program Accounts and Records (a) The Public Housing Authority must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The records must be in the form required by HUD, including requirements governing computerized or electronic forms of record-keeping. The Public Housing Authority must comply with the financial reporting requirements in Code of Federal Regulations 24 part 5, subpart H. (e) During the term of each assisted lease, and for at least three years thereafter, the Public Housing Authority must keep: (1) A copy of the executed lease; (2) The Housing Assistance Payment contract; and (3) The application from the family. (f) The Public Housing Authority must keep the following records for at least three years: (1) Records that provide income, racial, ethnic, gender, and disability status data on program applicants and participants; (4) Unit inspection reports; (5) Lead-based paint records as required by part 35, subpart B of this title. (7) Records to document the basis for Public Housing Authority determination that rent to owner is a reasonable rent (initially and during the term of a Housing Assistance Payment contract); and (8) Other records specified by HUD. 24 CFR [Code of Federal Regulations] 982.305, Public Housing Authority Approval of Assisted Tenancy (b) Actions before lease term. (1) All of the following must always be completed before the beginning of the initial term of the lease for a unit: (ii) The landlord and the tenant have executed the lease (including the HUD-prescribed tenancy addendum, and the lead-based paint disclosure information as required in 35.92(b) of this title). (c) When Housing Assistance Payment contract is executed. (2) The Public Housing Authority may not pay any housing assistance payment to the owner until the Housing Assistance Payment contract has been executed. (4) Any Housing Assistance Payment contract executed after the 60 day period is void, and the Public Housing Authority may not pay any housing assistance payment to the owner. 31 24 CFR [Code of Federal Regulations] 982.311, When Assistance Is Paid (a) Payments under HAP [housing assistance payments] contract. Housing assistance payments are paid to the owner in accordance with the terms of the HAP contract. Housing assistance payments may only be paid to the owner during the lease term, and while the family is residing in the unit. 24 CFR [Code of Federal Regulations] 982.507, Rent to Owner: Reasonable Rent (a) Public Housing Authority Determination. (1) The Public Housing Authority may not approve a lease until the Public Housing Authority determines that the initial rent to owner is a reasonable rent. (2) The Public Housing Authority must re-determine the reasonable rent: (i) Before any increase in the rent to owner; (4) At all times during the assisted tenancy, the rent to owner may not exceed the reasonable rent as most recently determined or redetermined by the Public Housing Authority. 24 CFR [Code of Federal Regulations] 982.516, Family Income and Composition: Regular and Interim Examinations (a) Public Housing Authority responsibility for reexamination and verification. (1) The Public Housing Authority must conduct a reexamination of family income and composition at least annually. (2) The Public Housing Authority must obtain and document in the tenant file third party verification of the following factors, or must document in the tenant file why third party verification was not available: (i) Reported family annual income; (ii) The value of assets; (iii) Expenses related to deductions from annual income; and (iv) Other factors that affect the determination of adjusted income. (g) Execution of release and consent. (1) As a condition of admission to or continued assistance under the program, the Public Housing Authority shall require the family head, and such other family members as the Public Housing Authority designates, to execute a HUD-approved release and consent form (including any release and consent as required under Sec. 5.230 of this title) authorizing any depository or private source of income, or any Federal, State or local agency, to furnish or release to the Public Housing Authority or HUD such information as the Public Housing Authority or HUD determines to be necessary. (2) The Public Housing Authority and HUD must limit the use or disclosure of information obtained from a family or from another source pursuant to this release and consent to purposes directly in connection with administration of the program. HUD’s Section 8 Housing Choice Voucher Program Guidebook, 7420.10G, Chapter 5, Section 5.2, Eligibility Requirements There are four factors which affect eligibility: 32 • Family definition. Only applicants who meet a PHA’s [public housing agency] definition of family are eligible. • Income limits. The household’s annual income may not exceed the applicable income limit as established by HUD. • Citizenship status. The applicant must meet the documentation requirements of citizenship or eligible immigration status. • Eviction for drug-related criminal activity. Persons evicted from public housing or any Section 8 program for drug-related criminal activity are ineligible for assistance for at least three years from the date of the eviction. The PHA’s administrative plan must contain procedures for determining eligibility and denial of assistance. Citizenship Status Limits on Assistance to Non-Citizens Eligibility for federal housing assistance is limited to U.S. citizens and applicants who have eligible immigration status. Eligible immigrants are persons who qualify for one of the immigrant categories in Table 5-1. Persons claiming eligible immigration status must present appropriate immigration documents, which must be verified by the PHA through the Immigration and Naturalization Service (INS). Every applicant household for (and participant in) the housing choice voucher program must sign a certification for every household member either claiming status as: • A U.S. citizen, or • An eligible alien, or • Stating the individual’s choice not to claim eligible status and acknowledge ineligibility. The Housing Authority of the City of Pittsburgh’s Housing Choice Voucher Program Administrative Plan The Authority’s Section 8 administrative plan establishes its policies and procedures used to administer the Section 8 Housing Choice Voucher program in accordance with HUD requirements. 33 Appendix D RESULTS OF TENANT FILE REVIEWS HAP contract present, (Authorization for the contract was executed Lease present, signed, Criminal background Information/ Privacy third- party evidence HAP paid after HAP assistance payments∗ Rent reasonableness the term of the lease Request for tenancy Lease signed before Housing assistance executed within 60 Income verified to Ineligible housing signed, and dated HUD Form 9886 days of the lease reexaminations determinations HAP contract payments not Lead- based certification Act Notice) supported* Release of and dated approval Interim Tenant checks 1 X X $6,860 2 X X X 3 X X 4 X X X $6,325 5 X X $408 6 X X X 8 XX XX 9 X X X X 10 X X 11 XX X X 12 X X X X 13 XX XX XX $6,655 14 X X $9,404 15 XX X $1,638 16 X X $8,241 17 X X X $9,954 18 XX X XX X $2,262 19 XX X X 20 XX X X X X $1,248 $8,790 21 X 22 X X X X X X $1,985 23 X X X X X $1,815 24 X X X 25 X X 26 X X X X X $2,015 28 X 29 X X X $2,015 30 X X X X $1,035 Totals 1 3 1 27 18 4 10 1 5 3 5 6 $12,180 $58,470 NOTE: An "X" identifies a deficiency in the file. More than one “X” represents multiple occurrences of the deficiency. * To avoid double counting, we did not report questioned costs both as ineligible payments and unsupported costs. 34 Appendix E HOUSING ASSISTANCE PAYMENT ERRORS Utility allowance Over- over- Under- Total Tenant payments payments payments Total over- under- number to landlord to tenant to landlord payments payments 01 $645 $645 03 $20 $120 $140 08 $3,339 $3,339 11 $1,140 $1,140 12 $128 $128 13 $450 $450 14 $72 $72 20 $120 $120 22 $40 $40 30 $445 $445 Totals $4,691 $120 $1,708 $4,811 $1,708 35
The Housing Authority of the City of Pittsburgh, Pennsylvania, Did Not Adequately Administer Its Housing Assistance Payments for Leased Housing
Published by the Department of Housing and Urban Development, Office of Inspector General on 2008-09-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)